Some Thoughts On Conflicts, EBT’s and SPL v Rangers in Reply to Comments

The blog was busy yesterday with comments, for which many thanks to all.

However, I wanted to deal specifically with a few contributors, who made the mistake of asking me for a response either directly or by implication. 🙂

This blog post therefore provides some further thoughts on a few matters – EBT’s, the tax case, conflicts of interest, whataboutery, Minority Report by Philip K Dick, the cultural significance of Rangers and whether there is a point to investigating past offences.

Finally by way of housekeeping, I remark on a recent burst of comments which I have not approved for publication on the site.

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First Caldeer Sing posted comments, extracts from which are in bold, with my responses underneath.

Caldeer Sing said:-

(You said) “whenever a prominent person is charged with a criminal offence.”

Neither Rangers the club, nor any individual at Rangers have committed a criminal act. This angle is disingenuous at best or down right malignant at best.”

You know and I know that I was not saying in my post that Rangers FC were guilty of criminal offences.

I am interested however by your confidence that no criminal acts have been committed. What about Mr Whyte who, it is said, is under investigation?

I was simply offering the comment that the alleged “media obsession” on what is perceived as the maximum penalty is exactly what goes on when any public figure faces proceedings, whether legal or regulatory, which offer a range of sanctions if guilt be found.

Does that do?

I also do my best to avoid being disingenuous, and I do avoid malignancy. Please point out to me where I have failed to do so.

 

Caldeer Sing said:-

 “Do they accept that having players on EBT’s was against the rules, even if only as “technical offences”?” – This is another bizarre statement here.

Legally and also under SPL rules, the use of EBT’s were permitted. I’m not sure if, to give you the benefit of the doubt, that you are perhaps assuming that your readers are aware of HMRC tax legislation and also the SPL rules that member clubs need to abide by hence you have glossed over the finer technicalities of this point.

The crux of the HMRC case is how these legal EBT’s were administered making them invalid as a legal tax avoidance scheme, with HMRC now expecting appropriate payment and penalty if applicable.

I’m not doing very well, am I?

I will try to explain briefly (hah). MIH used EBT’s as a tax reduction device. These were used over a number of years and to the tune of many millions of pounds to the benefit of various employees of Rangers. This included players and executives (and Aggie the tea lady for all we know).

Ruud Gulit and Aggie, the EB Tea Lady #getscoat

The rules of Scottish football require that details in writing of all payments to be made to a player for football related activity must be disclosed in the player’s contract, which must be in a standard form, and deposited with the SFA.

By definition, payments which were intended to be non-contractual will not be declared in the contract (otherwise they would be contractual). Such non-contractual payments might include discretionary loans made to the player by an offshore trust which under no circumstances could be accused simply of paying over money from the employer to the employee to save tax.

However, as far as has been made clear by the BBC amongst others, Rangers managed to make a botch job of the tax reduction scheme. Details were put in writing regarding the amounts to be paid, relating them, it is alleged, to success on the field, almost as if they were bonuses. Secondly letters were provided to the beneficiaries, it is alleged, stating that the loans would not require to be repaid. A loan which does not need to be repaid is not a loan.

HMRC decided that these payments were not in accordance with what was needed to make an EBT scheme valid as a tax reduction scheme. In February 2008 (!!!) HMRC sent its first demand to Rangers for payment in connection with these EBT’s. Rangers refused to accept these determinations and appealed, leading to the long-running “Big Tax Case” and directly causing the creation of the Rangers Tax Case Blog, much to the chagrin of many, and the amusement and enlightenment of many more.

My post from earlier today  might help.

Were EBT’s “illegal” per se? No. Were they “illegal” if operated improperly? Yes, they could be. Was use of them criminal? Possibly, depending on the precise method of use, and whether paperwork was completed with false declarations, or shredded, or many other variables.

Am I suggesting Rangers use of EBT’s was criminal? No.

I referred to “technical offences” as that phrase had been used earlier in a clear effort to mitigate the alleged wrongdoing.

The outcome of the tax case is not directly relevant to the dual contract/illegal registration issue anyway. As mentioned above, did all payments for footballing activities go down on the written contracts lodged with the SFA? If not, the players involved were improperly registered. That breaks SFA rules, and also those of the SPL and SFL. It is a football offence to play an improperly registered player.

As for the suggestion that HMRC are expecting payment – well they are not going to get it as the company liable to pay is going into liquidation, unless Mr Green chooses to make a contribution? After all, he insists it is the same “Rangers”.

 

Caldeer Sing said:-

One thing that I don’t understand with the SPL’s stance on this is that Rangers paid for these EBT’s to be administered. If rules were broken, then the sanction is that Rangers would be liable for the tax saved. Rangers would then take any appropriate action against an indemnified company or individual if possible. There is, in my opinion here no need for any SPL enquiry as sanction has been met by the extra tax demand and penalty.

Rangers paid MIH to administer the EBT’s. MIH and Rangers allegedly got that wrong.

That means that, should the Independent Commission find that registration rules were broken, then players were improperly registered and I would refer you to my answer/comment above.

You say there is no need for any SPL enquiry as the “sanction has been met by the extra tax demand and penalty.” The tax demand and penalty will not be paid – how does that “meet the sanction”?.

Therefore on your analysis Rangers get off scot-free.

 

Caldeer Sing said:-

I’m afraid I do see a direct and unavoidable conflict of interest with Harper Macleods involvent. If this panel finds against Rangers and Rangers choose to appeal, the appeal would be heard by the SFA. With HM being the lawyers for the SFA, and also the lawyers that investigated Rangers any fair minded individual would demand that sporting and legal integrity is not only maintained but is seen to be maintained. Could the SFA really turn on the evidence provided by their own lawyers if it did turn out that there was no case to answer. Luckily the statements from Peter Lawwell waxing lyrical about HM on their web site have recently been removed or the potential for egg and face meeting could be rather high.

Did you read the definition of “conflict of interest” I posted?

I have posted a new piece on conflicts of interest.

You will note that HM are NOT the lawyers for the SFA. The issue you raise in the paragraph above is a false premise.

 

Caldeer Sing said:-

There are other glaring points that I’m sure will be picked apart at others leisure, and I am positive that you did not set out to mislead or distort the truth to play to the gallery.

I would be delighted if you could point out the glaring points you refer to. I am always happy to be educated and corrected. I also did not mislead, nor distort the truth, never mind not set out to do so.

 

I googled “playing to the gallery” and this appeared!

Caldeer Sing said:-

Always happy to hear a balanced and reasoned response.

I hope you find this balanced and reasonable?

 

Later Caldeer Sing commented again:-

I was replying to the wording in the blog, which, to me, seems to be trying to suggest that the use of EBT’s is criminal, illegal and against SPL rules. That is simply wrong and should be rightly challenged and corrected at every opportunity. EBT’s were a legal and valid vehicle for tax avoidance. In this particular case with Rangers it is how the EBT’s were administered that is being challenged.

As mentioned above, I was not suggesting that the use of the EBT’s was criminal. There is a prima facie case that they were used illegally, in that HMRC believe they do not meet the legal requirements for successfully reducing tax and there is a prima facie case that player registration rules were broken.

 

Caldeer Sing said:-

While I can’t disagree with your point about the nature of comments about PL’s daughter, I would hope you would agree that all sides need to calm this sort of thing. There are some comments even on this blog that could be viewed as a desire for ethnic cleansing of Rangers fans. There are no doubt extremists on both sides, the worry for Rangers fans is that some of these extremists are the ones driving what they see as an bigoted attack on their club. Of course bigoted does not have to imply a religious connotation.

A little sprinkling of “whataboutery”. Please direct me to the comments here seeking the “ethnic cleansing” of Rangers fans.

“Bigoted does not have to imply a religious connotation.” True. In Scotland however it has what is perceived as a religious connotation, even if many who attend Ibrox and Parkhead would fail an exam on issue s of theology, religious belief and religious history. Football does not equal religion. In the West of Scotland however many people see them as synonymous (wrongly).

I also note that you have bought into the Charles Green defence of “Just because I mentioned bigotry, why jump to the conclusion it is religious bigotry I am talking about”. We will see if that one convinces an SFA Judicial Panel, if Mr Green appears there for his comments.

Your comment too about extremists on “both” sides sums up much of what is ailing in Scottish football. There are of course 42 “sides”.

 

Caldeer Sing said:-

The danger in trying to use any rule to ‘hammer’ one club is that a closer look at any club will no doubt uncover blatant breaches. Which already seems to have happened.

What “blatant rule breaches” are you referring to? I assume you mean by teams other than Rangers? Please enlighten us.

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Iain chipped in too, asking:-

If anyone could demonstrate once and for all that EBT’s resulted in Rangers getting better players than they otherwise would I would like to see it.

As I say…I keep hearing that EBT’s meant players we wouldn’t have signed otherwise.
So…is there ANY proof that is true?

Performance enhancing drugs are banned throughout sport. EPO, steroids, blood doping, HGH – all of these are banned and users will be punished for being caught.

However the evidence of benefits to athletes from some of these is slim and indeed non-existent.

By your argument, as I understand it, if an athlete took a banned substance, but there was no proof it aided their performance, they should be cleared?

Dwain Chambers took a cocktail of seven banned drugs – did the athletics authorities have to prove they actually helped him before they could impose a ban? No.

Why did Rangers use EBT’s? They did so to reduce what they paid in tax.

What did they do with the money saved? Either they paid it to their players, thus allowing them to afford more expensive, if not necessarily better, players. Or they “invested” it in the club. Either way, they did it in an attempt to benefit Rangers.

If the IOC banned the use of the colour yellow on athletes’ uniforms, would they excuse Usain Bolt for wearing a Jamaica strip on the basis that there was no proof that yellow made you run faster?

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Andy raised the following:-

At the end of the day, players won the games, lifted the trophies and have the medals, fans have the memories and you can re-write what you want if that’s what satisfies the masses at parkhead.

If the players were ineligible, then they ought not to have been playing. An Independent Commission will decide if that is the case, and what penalty to impose.

Maybe Ben Johnson feels he still won the 100 meters race in Seoul. However, look in the record books. He came first- broke the rules – and was disqualified.

The memories cannot be removed, but the record books can be corrected.

Ben Johnson remembers winning this race in 1988 – but you won’t find his name in the record books as the gold medallist

 

Andy said:-

The Spl will no doubt be paying HM and whoever else substantial amounts of money to investigate something that has no true relevant benefit to anyone just now apart from Big Scary partner at HM back pockets. Would it not be better to put any spare funds at the moment to use in the actual game right now, today, rather than spend it on trawling through the past….again.

By definition, unless we are living in the time of Philip K Dick’s Minority Report, any disciplinary action can only take place in connection with events that happened in the past.

Perhaps if the Rangers support had not made such a huge song and dance about the record book being altered, for example indicating that it really did not bother them, then the will of the SPL to investigate might have been less. But the position of the Rangers support to the SPL is (a) do not take away the trophies we won, which you allege were won with illegally registered players and (b) do not waste time and money investigating the matter as it is in the past and does not matter.

That strikes me as a trifle inconsistent.

 

Andy said:-

At the end of the day were arguing over what players were paid, the route of all this is that Rangers were paying players more money than we could afford. Clearly this is already obvious with liquidation etc, this investigation, is simply another muck-raking excerise to try and bestow further sanctions on the club, because clubs, fans etc feel hard done by because Rangers won titles in many peoples eyes unfairly!! Lets not joke around that it’s about upholding the rule around proper registration of players, it simply isn’t, it’s about Scottish football trying to get it’s own back because they feel hard done by.

“Muck raking”? This is all revenge by everyone else in Scottish football?

 

Andy continued:-

Yes, Rangers have done wrong, so has Celtic and the rest in the past, my point is we cannot move on with this air of defensiveness (Rangers) and Bitterness (SPL) unless people can forgive and move on..Stripping titles etc no matter what the club only creates a hostile enviroment, whereas spending the money on implementing change to the benefit of all is in my opinion what we should be doing….

When are Celtic or any of “the rest” alleged to have pursued a campaign of tax reduction tactics leading to players being improperly registered over a ten-year period?

Is now the time for forgiveness? I am not aware of anyone connected with Ibrox asking for forgiveness – that requires an admission of wrong-doing first.

 

Andy said:-

Would it not be better to have said, okay Rangers are in the third division starting again like they should be and the small clubs can benefit as they progress, the rest of us are here in the Spl can set about ensuring youth development actually works and maybe just maybe in ten years we’ll have a top league worth watching and a national team that we can actualy organise our summer holidays around!!

The SFL have embraced our admission as have we in turn and hopefully, 3 years apart can put an end to the majority of the bigotry in this country as a side benefit, Rangers and SFL have started a new beginning, it’s time for the SPL to move on as well…

I appreciate you ending with a vision of how to move forward. This upheaval in Scottish football should be taken as an opportunity, not to bury the game, but to try to breathe new life into it.

I would be delighted if the next three years saw an end to bigotry in Scotland. I am sceptical, but that is for another day.

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Colin contributed the following:-

The above article by Paul McC is fundamentally flawed because of the narrow prism through which he seeks to make his point. It singularly fails to take account of the cultural significance of Rangers and their history. Petty bureacratic legalists will always determine that Rangers have transmogrified in to some kind of new body and often rejoice in citing technical definitions rooted in dry corporate legalistic terminology. But a football club is something that has a cultural meaning that reaches way beyond any obscure technical definition. All true fans of football know this in their heart. Rangers might be declared technically dead but they are clearly alive and kicking (quite vibrantly if recent season ticket queues are considered) in a more meaningful cultural sense in the West of Scotland and beyond. Only when those discussing this issue begin their analysis from a more rounded and balanced perspective will we achieve useful progression.

Gosh – Colin is a tough critic. “Fundamentally flawed”. “Narrow prism”. “Petty bureaucratic legalist”. “Citing technical definitions rooted in dry corporate legalistic terminology”. Actually, he has a lot of this blog spot on! 🙂

The comments after Colin’s initial contribution debated at some length the “cultural significance” of Rangers. It is clear both from my blog, and from the infinitely wider perspective of Scottish society, that the “cultural significance” of Rangers is hotly debated, and whether that is positive or negative will not be resolved in this post.

Quite what it has to do with the alleged rule breaking by Rangers however, I have no idea.

Rangers is in a Schrodinger’s Cat situation just now.

Some believe it has ended and that the new company = new team. Others believe that, notwithstanding the name over the door, it is still the same team.

I try to write from a rounded and balanced perspective – if I fail, then I am happy for people to let me know.

 

Colin added:-

It will be for the SPL’s appointed legal firm to determine innocence or guilt with regard to contractual arrangements for Ranger’s players.

As discussed at length that is factually incorrect.

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I appreciate the involvement of commenters in the blog – that is what gives it life. I am happy when people disagree with me and educate me. I claim no infallibility, even when writing ex cathedra.

There is one comment I will make, which is not directed, for the avoidance of doubt, at any of those mentioned above.

Recent days have seen a flood of comments, some short and some long, referring to recent disciplinary action at Penn State University and linking this to a person in Celtic’s past.

I emailed a couple of the commenters who provided lengthy quotes, which I suspect came from Rangers supporting websites, advising why I had not approved their comments but stating that if they wished to write a “guest post” for consideration which met my standards for publication, then I would be happy to put it on the site. As yet nobody has replied to me.

What I would say is that the analogy being drawn is a flawed one in my view, and I cannot understand how the particular topic, which is a deeply sensitive and disturbing one, can be trotted out by people as an example of “whataboutery”.

So, to save people time, do not bother trying to post comments in line with what I have just mentioned, unless you want to take the time and trouble to analyse the issues and place them in some form of context. I have read the excellent coverage of the Penn State situation from SI.com over many months, and the Freeh Report too. Trotting out the line that Penn State = Celtic is wrong, and an insult to the victims of crime in each location, by trivialising their suffering in the name of rather unpleasant “point scoring”.

Thank you for your attention, and now back to your regularly scheduled “Petty bureaucratic legalism”. 🙂

Posted by Paul McConville